Fin Analysis - Tvs motor company

8/12/2019 Fin Analysis - Tvs motor company

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Introduction TVS Group TVS Motor Company Limited is the flagship company of TVSGroup, the USD 2.2 billion group.

The Group is the third largest two-wheeler manufacturer in India

and globally among the top ten, with an annual turnover of overUSD 650 million.

The TVS group was established in 1911 by Shri. T. V. SundaramIyengar

The TVS group is today a leading player in automobile andautomotive industry

The group has 30 companies and employs more than 40,000people and TVS motor company is the largest among the group

companies in terms of size and turnover


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TVS Motor CompanyIt is Indias third largest two-wheeler manufacturer and one among the top tenin the world

It has 4 manufacturing plants in country

It has 15 percent market share in the two-wheeler industry in India

More than 15 million customer

Product offerings in all segment of the two-wheeler & three-wheeler industryin India

Products exported to more than 50 countries

The company entered into a technical know-how and assistance agreementwith Suzuki Motor Co Ltd of Japan in the year 1982

TVS Motor Company is the first two-wheeler manufacturer to be honouredwith the hallmark of Japanese Quality - The Deming Prize for Total QualityManagement.

The TVS group and Suzuki Motor Corporation parted ways from their 15-year-old joint venture on September 27, 2001.


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Product MatrixTwo Wheeler

Scooterette - Scooty Pep, Scooty Teenz, Scooty StreakScooter- WegoMotorcycles- Sport, City, Jive, Flame, Apache

Three WheelerTVS King


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Business Analysis

2,748.88,48.75 %

1,235.34,21.91%

1,340.69,23.77%

314.35,5.57%

Segmental Revenue

Motorcycles

Mopeds

Scooters

Three wheelers

Segmental Revenue

2011 2010 2011 2010

Sales:Quantitative

(Units in Lakhs)Financial

(Rupees in Crores)

Motorcycles 8.33 6.38 2,748.88 2,046.23

Mopeds 7.05 5.71 1,235.34 952.48

Scooters 4.66 3.1 1,340.69 822.03

Three wheelers 0.39 0.15 314.35 120.53

Total 20.43 15.34 5,639.26 3,941.27

8.33,40.77%

7.05,34.51%

4.66,22.81%

0.39,1.91%

Segmental Revenue (Units in Lakhs)

Motorcycles

Mopeds

Scooters

Three wheelers


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Indian Two Wheeler Industry

The Indian two-wheeler (2W) industry has shown a strong volume growthover the last two-years, having grown by 25% in 2009-10 and 27% in 2010-11to reach 13.3 million units.

Going forward, It is expected to report a volume CAGR of 10-12% over the nextfive years to reach a size of ~21-23 million units by 2015-16.

India is Second largest two wheelers market in the world and two wheelerscontribute near about 76% of volumes to the entire automobile industry

The landscape of the Indian 2W industry is set to evolve as several new playersare keen to enter into the Indian market which would further intensifycompetition.

Most existing players plan to extend/ strengthen their reach into the rural andsemi-urban markets to harness incremental growth opportunities.

Manufacturers are also showing increased thrust on new product developmentand repositioning to tap new customer segments


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Indian 2-Wheeler Market

50% 30% 13% 4% 1% 2%


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SWOT Analysis- TVSStrengths

Strong Presence in two wheeler segment &Entering strongly in the three wheeler segmentProduct Portfolio varies from mopeds tomotorcyclesEntering into different segment of scooters

(100+CC)Monopoly in the moped segmentStrong presence in Indonesia in two wheelersegment and showing improvement YOY

OpportunitiesRise in GDP per Capita to increase affordability of2WYouth Population in India : ~70 % of Indias population in under 35 Years of ageReplacement demand to be a key contributor to2W industry volumes going forward2W remains amongst the most economical modesof commuting

WeaknessLow Profit Margins during FY11Poor acceptance of new product launches Jive& Wego

ThreatsSuccessful Products from Competitor

Increase in the Raw material price would harmthe margin growth aheadRise in interest rates and fuel prices


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Annexure to SWOT

ParticularsOrdinary

Bus Service -Bangalore

VolvoAC Bus -

Bangalore

Namma

Metro

2W-ExecutiveSegment

4W-Entry

SegmentFuel Efficiency (km/ litre) 70 15

Fuel Costs (Rs./ litre) 74 74

Average Running Charges per km (Rs.) 1.22 2.50 2.25 1.05 4.90

Monthly Service Charges (Rs.) 0.0 0.0 0.0 50.0 250.0

Monthly Insurance Charges (Rs.) 0.0 0.0 0.0 60.0 500.0

No. of km travelled per month 1000 1000 1000 1000 1000

Total Operating Costs per month (Rs.) 1,220 2,500 2,250 1,160 5,650

1. Two Wheeler remains amongst the most economical modes of commuting

2. Replacement Demand to go up in recent future 3. Trend in India's Population and GDP per Capita


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Financial Highlights 2010-2011Particulars Mar-11 Mar-10

ABSOLUTECHANGE % CHANGE

Sales 6,433 4,544 1,889 42%

Operating Expenses 1,233 1,057 176 17%

Operating Profit 247 106 141 133%

Non-Operating income 153 142 11 8%

Interest 88 89 -1 -2%

Depreciation 134 137 -3 -2%

PBT 178 22 157 718%

Tax 50 -12 62 -517%

PAT 128 34 95 280%

Total Liabilities 1,675 1,859 -184 -10%

Net Worth 683 620 63 10%

Paid up Equity Shares 48 24 24 100%

Other Equity 1 - 1 #DIV/0!

Reserves 634 596 38 6%

Other LT Liabilities 34 65 -31 -48%

Total assets 1,675 1,859 -184 -10%

Fixed assets 1,352 1,197 155 13%

Investment 209 73 136 186%

Other Non-current Assets - 35 -35 -100%

Current assets, loans and advances 1,261 1,357 -96 -7%

Current liabilities & provisions 1,147 803 344 43%

Net Current Assets 114 554 -440 -79%


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Common Sized FinancialStatements

Particulars Mar-11 % Mar-10 % Mar-09 %Sales 6,433 100% 4,544 100% 3,748 100%

Cost of Sales 4,953 76.99% 3,381 74.41% 2,927 78.09%

Operating Expenses 1,233 19.16% 1,057 23.26% 767 20.46%

Operating Profit 247 3.84% 106 2.33% 54 1.44%Non-Operating income 153 2.38% 142 3.13% 74 1.98%

Non-Operating Expenses - 0.00% - 0.00% 5 0.13%

Interest 88 1.37% 89 1.97% 79 2.11%

Depreciation 134 2.08% 137 3.01% 133 3.55%PBT 178 2.77% 22 0.48% -89 -2.37%Tax 50 0.78% -12 -0.26% -26 -0.69%

PAT 128 1.99% 34 0.74% -63 -1.68%

Total Liabilities 1,675 100% 1,859 100% 1,848 100%Net Worth 683 40.78% 620 33.35% 640 34.63%Paid up Equity Shares 48 2.87% 24 1.29% 24 1.30%Other Equity 1 0.06% - 0.00% - 0.00%Reserves 634 37.85% 596 32.06% 616 33.33%

LT Borrowings 958 57.19% 1,174 63.15% 1,120 60.61%

Other LT Liabilities 34 2.03% 65 3.50% 88 4.76%

Total assets 1,675 100% 1,859 100% 1,848 100%Fixed assets 1,352 80.72% 1,197 64.39% 1,288 69.70%

Investment 209 12.48% 73 3.93% 110 5.95%

Other Non-Current Assets - 0.00% 35 1.88% 97 5.25%

Current assets, loans and advances 1,261 75.28% 1,357 73.00% 1,018 55.09%

Current liabilities & provisions 1,147 68.48% 803 43.20% 665 35.98%

Net Current Assets 114 6.81% 554 29.80% 353 19.10%


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Working Capital StatementParticulars 2008-09 2009-10 2010-11

Current AssetsInventories 366 342 603Sundry Debtors 192 226 286Cash & Bank Balance 67 125 43Other C.A. 141 415 53Loan & advances 252 249 276Total 1,018 1,357 1,261

Current LiabilitiesSundry Creditors 597 721 950Other Current Liabilities - 9 98Provisions 68 73 99Total 665 803 1,147Working Capital 353 554 114Increase/ (Decrease) W.C. 105 201 (440)

1,018

1,357

1,261

665

803

1,147

353

554

114

-

200

400

600

800

1,000

1,200

1,400

1,600

2008-09 2009-10 2010-11

Current Assets

Current Liabilities

Linear (Working Capital)

WC has decreased when compared to previous years due to decrease in STinvestments (from 313 Cr. to 12 Cr.) in current assets while the CL has gone updue to increase in Sundry creditors (from 721 cr. to 950 cr. in 2011).

Decreasing trend in WC is not a good sign as company may face a liquidity

problems in future.


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Operating Cycle Analysis

Particulars 2009 2010 2011

DIO (Days Inventory Outstanding) 50 38 35

DDO (Days Debtors Outstanding) 13 17 15

Operating cycle = DIO + DSO - DPO 63 55 50

DPO (Days Creditors Outstanding) 75 75 61

63

5550

0

10

20

30

40

50

60

70

2009 2010 2011

Operating cycle = DIO + DSO- DPO

Linear (Operating cycle =DIO + DSO - DPO)

Operating cycle is coming down YoY for the company which means company is ableto generate cash from operations swiftly when compared to previous years.

It also suggest that management is very efficient in managing the inventory anddebtors as both DIO & DDO has come down when compared to 2010.

They are also enjoying a high credit period allowed by their customers as they are

taking almost 2 months to pay back their creditors while debtors are getting realised in just half a month.


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Liquidity Position

Current RatioQuick Ratio


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Current Ratio


Current Assets 1,018 1,357 1,261

Current Liabilities 665 803 1,147

Current Ratio 1.53 1.69 1.10

1.531.69

1.10

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.601.80

2009 2010 2011

Current Ratio

Current Ratio

Linear (Current Ratio )


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Quick Ratio


Liquid Assets (CA- Stock- PP) 400 766 382

Current Liabilities 665 803 1,147

Quick Ratio 0.60 0.95 0.33

0.60

0.95

0.33

0.00

0.20

0.40

0.60

0.80

1.00

1.20

2009 2010 2011

Liquid Ratio

Linear (Liquid Ratio )

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Fin Analysis - Tvs motor company